Strategic vectors of transformational shifts in the national tourism...

CES Working Papers – Volume IX, Issue 3

506 This work is licensed under a Creative Commons Attribution License

Strategic vectors of transformational shifts in the national tourism

system of Ukraine

Alla OKHRIMENKO*

Abstract

The article determines transformational factors, which influence a national tourism system (NTS) of

Ukraine and proposes strategical vectors of its development. Research of the NTS as an economic

system is a pre-condition for formation of strategic vectors of development. Transformational driving

forces principally change scales, components, and proportions between external and internal factors

of development of the NTS. Correspondingly, the mentioned processes objectively encourage

modernization of the national tourism system and application of innovative managerial methods. The

following Strategical vectors of transformational shifts in the NTS were grounded: 1) Safety of

tourists and investors; 2) The normative and legislative framework of the NTS development; 3)

Development of infrastructure of the NTS component; 4) Human resources development; 5) A

marketing policy of the NTS promotion; 6) Ecological and cultural policies. Their implementation

will improve efficiency and competitiveness of the NTS and the national economy.

Keywords: national tourism system, transformation, strategic vectors, globalization

Introduction

In the modern society, tourism transforms from a complementary factor that has facilitated the

increase of potentials of national economies into a powerful system being an independent source of

economic growth, economic diversification, involvement of a considerable amount of monetary

funds, and formation of additional workplaces (Butler, 1980; Gunn, 1994; Sölter, 2000; Sharpley et

al., 2002; Babu, 2008; Scarpino, 2010; Ielenicz et al., 2013). For instance, Sölter (2000, p. 51)

mentions that “tourism is an independent system in our daily life and have interdisciplinary links”.

Ielenicz and Simoni (2013, р. 31) express a similar opinion stating that “tourism should be regarded

as a field with complex dynamic, geographic, temporal and unitary structure and functionality, and

not reduced to a simple economic sector (“tourism industry”) producing revenue”. Simultaneously,

* Alla OKHRIMENKO is Ph.D. (Economics), Associate Professor at Kyiv National University of Trade and Economics

Kyiv, Ukraine, e-mail: [email protected].

CES Working Papers | 2017 - volume IX(3) | wwww.ceswp.uaic.ro | ISSN: 2067 - 7693 | CC BY

Strategic vectors of transformational shifts in the national tourism system of Ukraine

507

“needless to state, already, the complexity and diversity of tourism industry are well acknowledged

globally and as a production system, it involves manufacturing, services and many other intangible

non-market inputs” (Babu, 2008, p. 44). Gunn (1994, p. 68) points out “development of tourism can

fulfill goals and objectives more successfully if it is designed and managed in the context of the

overall tourism system”.

All these facts prove the necessity of comprehensive consideration of tourism within the

tourism system being a powerful, self-contained, ramified, inter-sectoral economic system of the

national economy. It is worth mentioning that “the ability of ever-increasing numbers of people to

enjoy travel-related experiences has depended, by necessity, upon the myriad of organizations and

businesses that comprise the ‘tourism industry’. In other words, tourism has also developed into a

powerful, world-wide economic force” (Sharpley et al., 2002, р. 11).

It is important to notice that in 2016 international tourist arrivals continued their upward

trajectory in their seventh straight year of above-average growth despite many challenges, reaching

1.2 billion. A comparable sequence of uninterrupted solid growth has not been recorded since the

1960s (UNWTO, Annual Report 2016, p. 5). Thus, tourism is a major category of international trade

in services. In addition to receipts earned in destinations, international tourism also generated US$

216 billion in exports through international passenger transport services rendered to non-residents in

2016, bringing the total value of tourism exports up to US$ 1.4 trillion, or US$ 4 billion a day on

average (UNWTO, Tourism Highlights 2017, p. 2).

Taking onto consideration the above-mentioned conclusions, the author may summarize that a

tourism system “is an industry that aims at development and progress both in quantity and quality“

(Saarinen, 2005, р. 168). Heterogeneity and dynamicity (Baggio, 2008; Jakulin, 2016) as well as

vertical and horizontal relations are inherent to the tourism system. As any open system, it evolves

under influence of factors of external and internal environments (Sharpley, et al., 2002).

Nevertheless, “the twenty-first century has welcomed the tourism industry with a mixed bag;

containing shocks, uncertainties and a promising future” (Babu, et al., 2008, р. 1). Therefore, the

academic community pays attention to research of changes in modern tourism systems (Saarinen,

2004; Butler, 2015; Matei et al., 2014). Since such changes are of different origins, particularly

they “need to be examined in the context of the overall global change in areas such as technology,

affluence and political stability“ (Butler, 2008, р. 55) and “as a by-product of multi-level institutional

changes, technological progression, changing lifestyles, and perceptions and competition“ (Babu,

2008, р. 178), it is necessary to summarize and group real reasons of these changes and,


Alla OKHRIMENKO

508

correspondingly, to develop their strategic vectors directed towards development of tourism based on

conditions of a certain region or country.

The tourism system is a heterogenic and dynamic system. Vertical and horizontal relations are

inherent to this system. Like any open system, it evolves under the influence of factors of external

and internal environment.

Therefore, the research of functioning and development of the tourism system at different levels

(world, national, regional) should include the following actions:

- Firstly, it should take into account transformational trends of social development;

- Secondly, it should present instruments for determination and assessment of efficiency indicators,

synergy of components, multiplication and cumulative effects of the national tourism system;

- Thirdly, it should become the basis of a concept and strategic reference points of the tourism

system, which will contain certain managerial methods, instruments, indicators, parameters, and

will form a framework and a mechanism of its activity.

These aspects actualize the necessity of solving a scientific problem regarding using

concepts of national tourism system (NTS) transformations, which will most productively represent

this process in the context of assuming flexibility and the equilibration for the increase of its social

and economic significance as a sub-system of the national economy. In Ukraine, it is necessary to

indicate parameters, patterns, and trends of the NTS, taking into account the influence of exogenous

and endogenous environments for development of a progressive strategic vector of development.

An article purpose is determination of transformational factors affecting the NTS of Ukraine

and development of strategic vectors of its enhancement.

Methodological approach. Research of the NTS as an economic system is a pre-condition for

formation of strategic vectors of development. The main scientific paradigms of studying economic

systems are the following:

• A neoclassical paradigm, which considers an economic system as a set of interrelated agents

providing processes of production, distribution, and consumption; the main characteristics of

the system change over time insignificantly; respectively, the system clearly reveals during a

short-term period;

• An institutional paradigm, which states that streamlined and coherent common activity of

agents is provided due to institutions (rules, traditions, norms, and restrictions), including a

government as the main institution of a society;



509

• An evolutional paradigm (Boiko, 2009) based on dynamic perception of the structure of a social

and economic environment; unlike a state of equilibrium, this approach pays the main

attention to research of a state of imbalance;

• A postindustrial paradigm (Babu, 2008; Butler, 2008, 2015; Tribe et al., 2015) that

encompasses rapid development of the scientific progress, radical changes of the structure of

social welfare and employment, promotion of a system of the values, at the center of which is

a human with desires for self-improvement and self-development;

• A paradigm of sustainable development (Burkynckyi et al., 2011; Panasiuk, 2013), which is

referred to as a coordinated global strategy of the survival of humanity oriented towards

preservation and reproduction of natural populations on the scale being necessary for a return

to scopes of the biosphere capacity.

The examined scientific paradigms affirm an assertion that the NTS is a component of the

national and world economy. This assertion highlights dualism of the NTS, which is presented by the

following peculiarities:

• Firstly, this system is considered as an object and a subject of the influence of political,

economic, technological, cultural, ideological, mental, psychological, historical,

geographical, and other factors;

• Secondly, the NTS is a sub-system of the national social and economic environment, which

comprises other sub-systems, functioning and interaction of which conduce to asymmetry of

its development.

Correspondingly, there is a need to research impact factors, to develop effective mechanisms

of NTS functioning in accordance with them, and to counteract negative factors.

1. Theoretical aspects of transformational shifts in the national tourism systems

The author emphasizes that a national tourism system is a complicated, holistic, and integrated

unit within a general national economic system, which consists of a set of subjects of tourism and

complementary types of economic activity, markets, regulatory institutions, functioning of which is

aimed at organizing an environment as well as production, exchanges, distribution, and consumption

of a national tourism product and satisfaction of related needs.

The NTS is not stable, because it constantly develops. Changes or countering both positive and

negative factors are inherent to the development. Activation of globalization and integration


Alla OKHRIMENKO

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influences, formation of single economic space, “a knowledge society”, development of information

and communication technologies, orientation of interests and values of a society towards intangible

assets, etc. are sources of these processes.

Transformation of economic systems has been subject to research of numerous scientists during

a long period. In general, it is considered as a process of the change of system characteristics based

on mechanisms of self-organizations and the external influence.

“Transformation” or a single-function process “structural shifts” is a process of adaptation

(quantitative and qualitative adaptation) of economic system elements at macro-, mezzo-, and micro-

levels and their interrelations in accordance with regularities of functioning and development of the

market economy, which leads to formation of the qualitatively new structure” (Chernuk, 2011, p.

253). A concept “transformation” is frequently used in the process of studying globalization

processes.

The transformational economy is a modern stage of development of the world economic system.

It is characterized by the following main peculiarities: “globalization and urbanization; acceleration

of rates of the scientific and technical progress; informatization processes; transformation of ecology

into an economic resource; revaluation of old traditional resources and production technologies;

change of state functions” (Savushkin, 2014, р. 51).

There are opinions (Ierokhin, 2002; Balabanov et al., 2003; Kotyk, 2013) regarding indication

of four types of transformation of economic systems within the academic community. They are strictly

detected in the tourism system: structural, functional, organizational, managerial (see Table 1).

Table 1. Types of the NTS transformation

Structural: Functional Organizational Managerial

in the sectoral

context

in the territorial

context

Re-profiling,

diversification,

formation of

vertical market

structures

Change of forms of

organizing the

economy:

specialization,

integration,

concentration,

transition to

“flexible

production”, et al.

Widespread

implementation of

strategic business-

planning, corporate

management,

logistic schemes

and processes, and

marketing systems

Change of

system

elements, its

structure, and

activity

amounts

Change of the formed

territorial structure,

indication of growth

poles, formation of

clusters and territorial

network structures

Source: own representation



511

Studying development of tourism destinations, a set of which forms the NTS, scientists

(McLennan et al., 2012, p. 5) prove that the transformational theory regarding tourism systems

(destinations) is concerned with:

• The social dimensions of tourism destination evolution, where human institutions are prevalent

and easily identifiable;

• Other tourism constructs of transformation have included individual product transformations;

• Multiple tourism products, such as a destination or region;

• Multiple tourism products, such as a destination or a country.

Taking into account comprehensiveness, problematic nature, and ambiguousness of

assessments of such phenomenon as “transformation”, the author think that the NTS transformation

contemplates taking on new features, forms, structures, and nature under the influence of heterogenic

factors of exogenous and endogenous environments.

2. Manifestation of transformation factors in the NTC of Ukraine

Transformational driving forces principally change scales, components, and proportions

between external and internal factors of development of the NTS. Such tendencies clearly reveals in

the form of new components, organization structures and types of tourism, usage of resources, and

activation of opposite processes (consolidation and transformation towards the decrease of large tour

operators, approaches to government regulation and market self-regulation). Correspondingly, the

mentioned processes objectively encourage modernization of the national tourism system and

application of innovative managerial methods.

Transformational processes influence the structure of the very NTC. This process leads to

involvement of an even more considerable amount of activity types in its functioning.

Tourism and national tourism system “is, among other things, a system of distinct activities and

studies (knowledge), whose complexity is strongly influenced by both the variety of its components,

and the level of influence of those, against the human concern imposed by social, economic and

political conditions of the moment” (Ielenicz et al., 2013, p. 25). Because the author suggests to divide

the factors of the NTS transformation, according to various criteria, into the following groups: a)

sources: internal, external; b) consequences of manifestation: general, specific, individual; c) an

influence degree: main, secondary; d) the extent of inter-stipulation: independent, derivative; e) the


Alla OKHRIMENKO

512

sense: economic, political, technological, social and cultural, ecological; f) scale: local, general; g)

regularity of revealing: regular and random.

In addition to the mentioned grouping, the transformational factors in the NTS may have

different capacity of manifestation and the influence, consequences, durability, etc. They are also

characterized by a different reaction of counteraction and opportunities of implementation of some

consequences. The author may figuratively imagine the influence of global transformational

processes on the NTS as the change of their power, intensity, velocity, localization and transformation

under the influence of current political, economic, mental, social, and cultural factors. Moreover,

power of ones can decrease and power of the others, on the contrary, increase and intensify.

Grouping transformational factors of the NTS based on their intrinsic characteristics is most

widely applied (see Table 2). Nevertheless, distinction of certain consequences of the mentioned

groups of transformational factors is conditional to some extent.

Table 2. Manifestation of transformational factors in the NTS of Ukraine

Group of factors Form of manifestation

Political

Decrease of a safety rate or absence of safety because of military actions

Decrease of tourist flows

A departure from “strict” state regulation in favor of more soft regulation

Liberalization, decentralization, and democratization of state regulation

Activation of the role of international tourism organizations

Activation of a sustainable development policy

Economic

Changes of forms of business entities through processes of concentration and

deconcentration

Involvement of new components in tourism infrastructure (so-called “sharing economy”)

Involvement of foreign investments

Spread of transnational companies

Formation of strategic alliances (aviation companies, hotels, and tourism operators)

Social and

cultural

Extension of tourism activity scales

Spatial location of enterprises

Changes of values in approaches to organizing tourism from the standpoint of a

consumer as well as an organizer

Formation of a “global tourist”

Formation of “fashion” for tourism

Comprehensive consolidation and dialogue of all stakeholders

Ecological The focus on ecological problems in tourism

Activation of ecological tourism

Technological

Dynamic usage of global booking systems

Technology standardization

Dynamic development of innovations

Spread of communications

Appearance of new types of tourism (Е-tourism)

Activation of “informal component” of tourism (including tourism organized in the form

of freelance).




513

Nowadays, solving applied problems related to integration of the Ukrainian economy into the

European Union, formation of its positive image, enhancement of opportunities for attraction of

foreign and domestic tourists, optimal usage of the potential, effective government regulation and

market self-regulation in this sphere, formation of new competitive advantages of the national tourism

product, and involvement of investments is of considerable importance. Thus, they should be solved

from the standpoint of complex scientific managerial vision, which will enable to indicate critical

points, growth factors, reserves, and opportunities for methodology of the NTS management.

The NTS of Ukraine functions and develops under the permanent influence of various

transformational driving forces, capacity, and consequences. These forces principally change scales,

components, correlations between external and internal factors of the NTS development. These

influences are especially notable in following process:

• The change of a state regulation model (a shift to European one) in the context of shifting the

focus of influence on the NTS towards the economic sphere;

• Strengthening processes of decentralization, deregulation, integration, and consolidation,

which, in turn, stipulate changes in its structure;

• Changes in the structure of tourism flows and the structure of demand and supply of a tourist

product;

• Technological changes;

• Prevailing negative political as well as social and economic influences on its development.

• Since 2014, the NTS is influenced by negative factors:

• Russian military aggression which endangers tourism system and potential tourists;

• Economic challenges which: 1) affect the devaluation of the Ukrainian currency; 2) contribute

to the risk of tourism business; 3) do not contribute to the implementation of a clear business

planning; 4) create psychological barriers in the organization of tourist travel;

• Social problems among which are an increasing migration, rising unemployment, reduced

incomes, reducing demand for tourist services, leveling the human desire to travel;

• Organizational problems relating to the lack of adequate and pragmatic public policies in

tourism at national and local levels;

• Problems of cultural and educational nature concerning the low level of service and more.

The impact of the mentioned factors led to the change of structure of entrance and internal

tourism flows. In Ukraine, there has been a high rate of dependence of a tourism flow from the social

and economic as well as political state of a small number of countries and their relations with Ukraine


Alla OKHRIMENKO

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until now. On average, citizens of ten countries has accounted for 85.0% of a foreign tourist flow

(Russian citizens have accounted for 38.5% of them) until 2014. Over the last period, a situation has

changed under the influence of the mentioned political factors. According to the data of the State

Border Guard Service of Ukraine, the largest number of tourists have arrived in Ukraine from

Moldova and Belorussia. The top 10 for amount of tourism flow includes also Russia (nevertheless,

the flow has dramatically decreased by 58.0% compared with 2014) and Poland, Hungary, Romania,

Slovakia, Uzbekistan, Turkey and Germany (that is to say, neighboring countries). On the other hand,

a number of arrivals from countries traditionally belonged to a leading group of visitors of Ukraine

has been reduced.

Thus, dependence of the tourism flow from an inconsiderable group of countries remains, but

the structure has shifted towards involvement of citizens of neighboring countries. As for capacity of

an entrance tourism flow in Ukraine, it has decreased by 48.0% under the influence of the mentioned

factors.

The influence of the mentioned negative political processes may be illustrated with the example

of the main indicative figures of the NTS development (see Table 3).

Table 3. Dynamics of the main indicative figures of functioning of the NTS of Ukraine in 2011 – 2016

Category 2011 2012 2013 2014 2015 2016

Number of economic entities of the

tourism sphere, units 4793 5346 5711 3885 3182 3506

Revenues from providing tourism services,

million hryvnias 4937,7 6654,9 6496,8 5566,7 5015,3 11935,7

Number of tourists serviced by economic

entities of the tourism sphere13**,

thousand persons

2199,9 3000,7 3454,3 2425,1 2019,6 2549,6

Number of foreign citizens, who have

visited Ukraine, thousand persons 21415 23013 24671 12712 12428 13333,1

Source: State Statistics Service of Ukraine, Tourist activity in Ukraine (2017)

Taking into account the above-mentioned data, the author may conclude that amounts of the

main indicative figures, which describe functioning of the Ukrainian NTS, have considerably reduced

under the influence of the identified political factors since 2014.

This process led to deterioration of the global competitiveness ranking, according to which

Ukraine has ranked 76 – 88 among more than 136 world countries during 2008-2017 (see Figure 1).

13 without excursionists

http://dpsu.gov.ua/en/news/Recruitment-campaign-within-the-framework-of-the-pilot-project-New-face-of-the-border-started-in-the-State-Border-Guard-Service-of-Ukraine/






http://context.reverso.net/%D0%BF%D0%B5%D1%80%D0%B5%D0%B2%D0%BE%D0%B4/%D0%B0%D0%BD%D0%B3%D0%BB%D0%B8%D0%B9%D1%81%D0%BA%D0%B8%D0%B9-%D1%80%D1%83%D1%81%D1%81%D0%BA%D0%B8%D0%B9/excursionists



515

Figure 1. The dynamics of rating of the Travel & Tourism Competitiveness of Ukraine in 2008-201714

Source: World Economic Forum, The Travel & Tourism Competitiveness Report (2017)

Correspondingly, there is a need to determine instruments, which are able to activate

components of the NTS and their interrelations for achievement of synergetic, multiplication, and

cumulative effects. All these actions are aimed at enhancement of competitive positions and the

increase of activity efficiency.

2. Substantiation of vectors of the NTS development in Ukraine

Under conditions of modern transformational shifts, the main directions for modernization of

strategic vectors of the NTS development are as follows: a) formation of a management model based

on European standards; b) positioning the country as an authentic tourist destination with modern

infrastructure; c) guaranteeing safety for internal and foreign tourists and investors; d) sustainable

development; e) openness and accessibility.

In March 2017, The Cabinet of Ministers of Ukraine adopted the Strategy for the Development

of Tourism and Resorts until 2026 (2017). A purpose of its implementation is formation of facilitative

conditions for activation of development of the tourism and resort sphere in accordance with

international quality standards and European values, transformation of it into a high-profitable

competitive sphere integrated into the world market. These processes provide acceleration of social

14 In 2015, Ukraine was not subject to such research on account of political reasons

-77

0

-88

-77 -76-85

3,503,76

0

3,983,833,84

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

2008 2009 2011 2013 2015 2017

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

Rank Score


Alla OKHRIMENKO

516

and economic development of regions and the government in general and conduce to increase of life

quality of the population and harmonic development, consolidation of the society, and popularization

of Ukraine in the world. The mentioned Strategy includes a road map, which encompasses five

vectors: 1) Safety of tourists; 2) The normative and legislative basis of development of tourism and

resorts; 3) Development of tourism infrastructure; 4) Human resource development; 5) Marketing

policy of tourism promotion of Ukraine.

Having analyzed the above-mentioned document, the author suggests supplementing a vector

list with an important component such as “Ecological and Cultural Policy” as well as complementing

and broadening the scope of the determined vectors, because the mentioned document (The

Strategy…) does not contain aspects being necessary for Ukraine.

1. A vector “Tourist Safety” needs broader consideration. The government should guarantee

safety and protection of legitimate rights and interests for tourists as well as other interested persons,

particularly investors in the context of protection of their economic rights. Therefore, the author

proposes to call it “Safety of tourists and investors”.

Taking into account the annexation of Crimea by the Russian Federation and conducting the

anti-terrorist operation in the part of the territory of Donetsk and Luhansk regions, matters of tourist

safety and other stakeholders of the NTS assume extreme importance. Although the mentioned

territories are not great in size and free access from these territories is restricted, they generate a

considerable number of problems. Nowadays, development of measures for overcoming military

conflicts and terrorist acts is of considerable importance for Ukraine as well as the whole world.

Implementation of a centralized system for accounting of accidents related with safety of tourists and

other stakeholders may partially solve this problem. Such system will conduce to formation of a

mechanism of counteractions against negative phenomena. In addition, adoption of legislative acts

concerned with tourism activity safety and exercising a respective information policy are of great

importance.

In accordance with this direction, bodies of state authority and other interested persons must

establish effective mechanisms for real and financial guarantee liability of tourism activities to

tourists for failure or poor quality of travel services; In particular, the introduction of a differentiated

approach to the definition of insurance guarantees depending on the volume of services provided by

each specific tour operator for a certain period is, in our opinion, an effective tool. This measure will

contribute to the ensured justice for all tourism enterprises (small and micro enterprises in depressed



517

regions and powerful tour operators); this situation will also promote the creation of equal conditions

of competition in the domestic tourism market.

2. The scope of the vector “Normative and Legislative Framework of the NTS Development”

consists in the increase of influence of factors, which encourage the change of state regulation

structure in the context of the individual approach influence and reconsideration of the state regulation

role. Contemporary tendencies need transition from “bureaucratic” management to more effective

methods. Taking into account comprehensiveness and diversity of components and importance of the

NTS, the author proposes to form inter-agency bodies or delegation of powers to external agencies,

which orient towards inter-agency management and coordination of processes of tourism policy

development.

Over the last years, a model of the NTS management has quite changed frequently and

cardinally. Obviously, there is no final version. In this context, search for the model of the NTS

management is an important and applied goal. Since the choice of the model determines the role and

methods of the government in the NTS regulation, it should be based on the powerful scientific

framework. Positive trends are transition to a more “European” model of management of the NTS,

which consists in formation of a tourism policy by a powerful economic ministry on behalf of the

government. Nevertheless, taking into account importance and heterogeneity of the NTS components,

the author thinks that there is a need to create an inter-agency body of several ministers, which would

be eligible for formation of the government tourism policy.

The NTS management under condition of integration into the European and world spaces

should be based on respective philosophy and principles. In this context, it is appropriate to apply the

communication paradigm to a process of the NTS management. In the European community, the

paradigm statements form basic principles of functioning and development, which are affirmed by

scientific papers of leading scientists as well as practical implementation of ideas in work of the EU

executive bodies.

The communication paradigm does not deny existence of a subject and object type of relations.

Nevertheless, there is qualitative transformation of a management unit into an influence unit for the

purpose of interaction between co-subjects (Khashyieva, 2012, p.97).

Ukraine needs to strengthen the role of civil society (NGOs direction of travel / tourism

organizations public) in terms of tourism. For example, there are self-regulatory organizations (SRO)

and the organization of professionals. Self-regulation means a voluntary submission of its members

the rules of the organization to obtain a competitive advantage; affiliation of credible self-regulatory


Alla OKHRIMENKO

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organization that promotes sales of the product or service; consumers may also lose confidence in its

former member, if you exclude its members from reputable SRO (Opanasiuk et al., 2017, p. 90).

In that regard, it is important to include statements on liberalization of a visa regime for tourism-

related arrivals in Ukraine for citizens of a set of countries. Especially, this relates to simplification

of obtaining or abolition of visas for citizens of China, India, Persian Gulf countries, etc. A tourism

market of these countries is quite perspective for Ukraine. For instance, China ranks first in expenses

of tourists for travels, which accounted for 13.0% of world expanses in the tourism sphere in 2014.

Within the scope of determination of a level of openness and accessibility of the NTS, the author

uses the researches of UNWTO Visa Openness Report 2015, according to which Ukraine belongs to

a group of countries with a medium index of openness − 22-24 (an index for maximum openness

equals 53-100). This group contains Australia, a significant number of Latin American countries, and

all European countries without Belorussia and Russia. As at March 2016, citizens of only six countries

do not need a visa for entry into Ukraine (3.0% of a general number of countries) and citizens of 56

countries do not need a visa for a stay in Ukraine up to 90 days within a 180 day period (29.0%).

Citizens of 68.0% of countries enter Ukraine on the basis of visas. A share of country groups in view

of a visa regime for entry into Ukraine is shown in Figure 2.

Figure 2. A share of country groups in view of a visa regime for entry into Ukraine

Source: World Tourism Organization, Visa Openness Report (2015)

Certainly, simplification or abolition of visas for entry into Ukraine of citizens of certain

countries bear many risks, because visas are introduced for protection of citizen interests. Especially,

Do not need a visa

3%

Countries with a visa

regime 61%

Visa without having an

invitation letter

4%

Visa on arrival

3%

Do not need a visa for a

stay in Ukraine up

to 90 days within a 180

day period

29%



519

these risks are related to possibility of terrorist acts, national safety violations, and conflict

escalations. Nevertheless, a flexible policy towards this direction will conduce to involvement of a

more intensive flow of tourists. Such policy together with diversification of tourism supply will

facilitate growth of efficiency of the NTS and establishment of better relations between countries.

Moreover, implementation of electronic visas (e-Visas) for entry into Ukraine being innovative

technology is prospective within liberalization of the visa regime.

3. Considerable tasks are concerned with a vector “Development of Infrastructure of the NTS

Component”. In that regard, Ukraine needs solving numerous problems related to the worn and low-

effective infrastructure basis. Some positive shifts are concerned with development of hotel,

restaurant, and aviation businesses. Signing the agreement with the EU may be an important step.

Formation of innovative destination in the form of network-centric tourism and recreation

systems (network-centric models of destinations) is one of results of practical implementation of the

communication paradigm directly in tourism business at the regional level. Management of resources

of these destinations is based on territorially distributed networks of information and communication

hubs.

Competition for means of tourist accommodation has dynamically increased during the last

period. Experts indicate a so-called “main stream in tourism” – “sharing economy”, “P2P” (peer to

peer model of business). Sharing economy in tourism is referred to as a model implemented owing to

network technology, which consists in temporary providing consumers with certain resources free of

charge or on the basis of exchange of similar resources (housing, vehicles, equipment, and

competences). The European Parliament has considered a matter concerned with regulation and the

reaction to reasons and consequences of this phenomenon, because this phenomenon has positive and

negative consequences. The positive consequences of sharing economy may encompass the increase

of access and capacities of humans, especially with low incomes, in a tourism process. The negative

consequences may include absence of legal and safety protection of suppliers as well as consumers,

the loss of tax revenues owing to providing tourism services by unregistered economic entities,

possible low quality of providing and receiving services, etc.

In this regard, dynamism of manifestation of an “informal component”, in contrast to a so-

called “formal component” (governmental and non-governmental), is a quite relevant tendency for

Ukraine, which is not sufficiently considered in scientific literature. The informal component

encompasses providing tourism services organized in the freelance form, self-organized tourism,

activity of cultural establishments, and tourism of public organizations initiating tourism flows. It


Alla OKHRIMENKO

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increases under the influence of social transformations and information communication technologies.

Assessment of existence, the state, and dynamics of development of the mentioned informal

component of the NTS is one of the most complicated objects of identification.

The spread and role of transnational corporations (TNC) are especially notable in the NTS.

Economic advantages of TNC functioning in the NTS are as follows: a) conducing to development

of a system of investing the mentioned and related systems; b) the increase of efficiency of capital

usage and advantages of the economy of scale; c) a multiplication effect of the influence on other

economic systems; d) an opportunity of formation of the mentioned capital and solving global

problems; e) opportunities of diversification and specialization of production.

In the context of transnationalization, it is worth mentioning that tourism business is considered

as one of sectors of profitable investing capital abroad, which is related with long-term tendency of

the increase of international tourism flows, the geographical extension, and gradual entering the world

tourism market of less developed countries.

4. A vector “Human Resources Development” should be concerned with improvement of

professional skills of employers involved in the tourism system as well as the population in general

(enhancement of hospitality, knowledge of foreign languages that will conduce to a comfort stay of

internal and foreign tourists).

Numerous scientists in the tourism area take notice of the significant role of human resources

in effective functioning of tourism systems (Raj, 2008; Milic, et al., 2011; Kurdashvili, et al., 2016).

For instance, D. Perovic D., et al. using an Ordinary Least Square regression (OLS) investigated

whether intangible elements influence tourist’s perception about service quality. They have

concluded that an element such as «Communication with local people» has influence on perception

of service quality among three other types of intangible assets (а) kidness of people presents tourist’s

perception about kindness of people; b) security; c) kidness with childeren). This may be explained

by the fact that tourist interaction with each other and with local people, as well, is seen as an

important element of holiday and travel experience by modern tourist. (Perovic, et al., 2013, р. 66).

Human resources are one of 14 components, which are used by experts of World Economic

Forum to evaluate competitiveness of the tourism system. This fact confirms importance of human

resources for the tourism system.

A problem concerned with a low level of Ukrainian citizens’ knowledge of English is of

considerable importance. For example, according to the data of “Sociological research of tourist flows

to the Kyiv city” (2016), foreign tourists point out that only 27.4% of the citizens and 49.5% of



521

tourism service employees have a high level of English (Figure 3.). It is worth mentioning that these

figures are concerned with the capital of Ukraine. The situation in regions is worse. Therefore, there

is a need to implement measures regarding improvement in this situation, particularly within public

and private partnership on a volunteer basis.

Figure 3. Foreign tourists’ evaluation of knowledge of English of the local residents and tourism

service employees in Kyiv, 2016, %

Source: Sociological research of tourist flows to Kyiv (2016)

5. A marketing policy of the NTS promotion is primarily related with formation of the positive

image and popularization of Ukraine as a country being attractive and safe for tourism.

Having taken into account experience of the most visited countries of the EU, the Ukrainian

government made a decision regarding creation of the national tourism organization. Its purpose of

functioning will comprise the following elements: a) formation and promotion of a competitive

national tourism product in target tourism markets; b) development and implementation of a

marketing policy of promotion of the national tourism product; c) organizing, holding, and

participation at tourism exhibitions and vanities.

Various European world events, which significantly affect tourism development, are quite

important for tourism development. Hosting the final football tournament was an important event

over the last years in Ukraine. The research Zetiu et al. (2015, р. 387) shows “how a tourist destination

may become a brand by means of events – a case study on Iasi as a candidate for European cultural

capital”. Significant hopes of tourism perspectives are placed on hosting the final of Eurovision in

Kyiv in 2017 and the final of UEFA Champions League in 2018.

6. Ecological and cultural policies should be concerned with the following processes: a)

implementation of a concept of ecologization of tourism sustainable development; b) strengthening

27,40%

72,60%

49,50% 50,50%

0,00%

20,00%

40,00%

60,00%

80,00%

Local residents Tourism service employees

High level Low level


Alla OKHRIMENKO

522

measures regarding protection of natural as well as historical and cultural heritage; c) preservation of

traditions and national identity.

Ukraine also should make maximum use of their own, unique to our state resources, methods,

psychological aspects (for example, the events of the Revolution of dignity led to increased attention

to Ukraine as a tourist destination; interested persons (stakeholders) should help attract tourist flow

by promoting patriotic tourism in our country).

Table 4 below contains the mentioned proposals regarding strategical vectors of

transformational shifts in the NTS of Ukraine.

Table 4. Strategical vectors of transformational shifts in the NTS of Ukraine

Vectors Directions

Safety of tourists and

investors

Providing safety of

tourists and protection of

their legitimate rights and

interests

Providing protection of rights and

economic interests of investors

investing in the national tourism

system

The normative and

legislative basis of

development of the

NTS

Implementation of the EU

legislation in the tourism

sphere

Liberalization and effective

regulation of conducting an

entrepreneurial activity in the

tourism sphere

Liberalization of the visa

regime for entry into

Ukraine

Development of the

NTS infrastructure

component

Providing complex

development of territories

Providing accessibility of tourism

infrastructure objects for disable

persons and other physically

challenged persons

Increase of quality of

tourism infrastructure

Human resource

development

Improvement of a system

for professional training

professionals in the

tourism sphere

Providing scientific maintenance

and the research in the tourism

sphere and resorts,

implementation of progressive

innovative developments

Extension of population

hospitality and

enhancement of people’s

knowledge of foreign

languages.

A marketing policy

of the NTS

promotion

Formation and promotion

of the positive image of

Ukraine

Formation and implementation of

competitive national, regional,

and local tourism products

Activation of country-

and world-level events in

Ukraine

Ecological and

cultural policy

Implementation of a

concept of ecologization

of tourism sustainable

development

Strengthening measures regarding

protection of natural as well as

historical and cultural heritage

Protection of traditions

and national identity


Strategical programs of the NTS development should be supported by appropriate financing

through involvement of private investments. And also “the state must create the optimum conditions

for doing business both in order to attract foreign investments and to create favourable conditions for

local entrepreneurs” (Okhrimenko et al., 2015, р. 52).

The author considers capital investments in the NTS of Ukraine according to the following

types of economic activity: a) temporary allocation and organizing meals; b) art, sport,



523

entertainments, and rest; c) activity of tourism agencies, tourism operators, providing other services

of booking and the related activity. As can be seen from Table 5, during 2011-2012 the investment

amount has increased by 49.8% and 61.6% respectively. The investment amount has been quite

considerably declined by 16.0%, 50.5%, and 5.0% since 2013.

Table 5. Dynamics and amounts of capital investments attracted in the NTS of Ukraine in 2011 – 2016

Category 2011 2012 2013 2014 2015 2016

Capital investment amount, million

hryvnias

3010,0 4862,9 4083,0 2022,4 1920,7 2182,4

Rate of the capital investment increase,

%

49,8 61,6 -16,0 -50,5 -5,0 +13,6

Source: State Statistics Service of Ukraine, Capital investment in Ukraine (2017)

Nevertheless, regardless of negative tendencies regarding financing tourism, revenues of the

State Budget of Ukraine from the NTS indicate quite positive trends (see Figure 4).

Figure 4. Economic contribution of the NTS to the GDP of Ukraine is determined in accordance

with researches of the UNWTO over the period of 2011-2017 1516

Source: World travel & tourism council, Travel & Tourism economic impact Ukraine (2017)

The research of the UNWTO “Travel & Tourism Economic Impact Ukraine 2017”, which is

based on the method of Tourism Satellite Account: Recommended Methodological Framework,

15 UAHbn, nominal prices 16 The data for 2017 are estimates

25,3 28,5 29,922,4

29,134,8 39,5

67,876,6 81,4

64,2

80

93,7105,2

93,1105,1

111,3

86,6

109,1

128,5

144,7

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 2015 2016 2017

Direct contribution of Travel & Tourism to GDP Other final impacts (indirect & induced)

Total contribution of Travel & Tourism to GDP


Alla OKHRIMENKO

524

determines the economic contribution of a sector “Travels and Tourism”, taking into consideration

the direct, indirect, and induced contribution of tourism to the GDP of Ukraine. The direct

contribution of the NTS to the GDP of Ukraine is caused by the activity directly related to providing

tourism servicing, particularly by tourism companies, hotels, aviation companies, other enterprises,

which provide passenger transport services, restaurants, entertainments establishments that work

directly with tourists. The contribution shows a positive trend regardless of negative consequences.

In general, the increase has accounts for 56.1% over a seven-year period.

The tourism activity leads to direct and secondary results. The secondary results are concerned

with revenues from tourism in related industries. A reason of appearance of induced results is the

increase of demand for goods and services owing to growth of tourism activity amounts. Over the

last seven years, the indirect induced and direct results of the NTS functioning have fluctuated within

72.7-74.1% and 25.9-27.3% respectively. Having determined the correlation between direct and other

final consequences of the NTS in the GDP structure, the author may conclude that each monetary

unit earned in tourism conduces to earning 2.7 – 2.9 monetary units in other industries in Ukraine.

That is to say, the NTS is able to activate positive shifts in other systems of the national economy

owing to the multiplication effect.

Globalization is one of the most influent transformational processes. On the one hand, the NTS

is an object of influence. On the other hand, it is a global social and economic phenomenon, which

significantly affects the international order. In the context of globalization phenomena, there is a

problem of their ambiguous consequences and the necessity of formation of a “protective” behavior

model because of the possible imbalance of social and cultural as well as ecological spheres. The loss

of national identity in tourism products, which may lead to complicated national problems, is

especially dangerous manifestation of globalization. Therefore, a flexible and effective policy

towards this direction should correct negative consequences.

Conclusions

The national tourism system (NTS) is a component of an economic system, which is based on

inter-sectoral interaction between economic entities concerned with production, selling, and

organizing consumption of a tourism product.

There is a need for determination of the strategic vectors of development of the national tourism

system in Ukraine under contemporary transformational shifts. The optimal balance between a set of



525

factors will become the basis for formation of the powerful competitive national tourism system of

Ukraine. These factors should include: a) taking into account experience of other countries and

specificity of our country in the process of formation of the development strategy; b) possible

transformational influences and reactions to them (prediction, usage of foresight methodology); c)

the dynamic increase and conformity to principles of sustainable development; d) formation of

development conceptions and opportunities of their implementation in practice.

Summarizing the research, it is worth highlighting that the subject area of conceptual

substantiation of transformational influences on the NTS is a complicated scientific problem. Solving

this problem is of considerable importance on the theoretical and practical dimensions. Thus, it

requires further research.

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